Post on 22-Jul-2015
Creating A Culture Of Cost
Management In Your Organization
J.R. Storment, Chief Customer Officer at Cloudability
@cloudability | Booth #403 | jr@cloudability.com
Cloud Infrastructure Analytics
Why should I care about Cost
Management?
NEW WAY: Many little decisions every day by many different
people
Why does it need to be cultural?
The cloud is no longer one person’s
responsibility…
Engineers Finance Operations Capacity Execs
How do you build the culture?
• Put data in the hands of the people
• Enact policies and evangelize best practices
• Incentivize good behavior
What happens when it works?
• There are no surprises
• Everyone is on the same page
• Make budgeting easier
• Better decisions are made from engineer to CEO
• Save money
0
45
90
135
180
225
Dev/T
est
PO
C
App #
1
App #
3
App #
2
Exec team starts
really caringL
oa
d t
est
A story of growth
Visibility
Allocation Efficiency
Savings
Unit Cost
Visibility
Allocation Efficiency
Savings
Unit Cost
Visibility
Allocation Efficiency
Savings
Unit Cost
I. Cost visibility
Two types of people
Incur costs Watch costs
Two types of people
Incur costs Watch costs
Two types of people
Incur costs Watch costs
Two types of people
Incur costs Watch costs
Two types of people
Manage costs Watch costs
Tips for cost visibility
• Get each stakeholder the spending
fundamentals daily
• Let each team see other teams’ spending habits
• Create broadly available dashboards
Visibility
Allocation Efficiency
Savings
Unit Cost
II. Allocation
First, get everyone involved
๏ Multiple major business units
๏ Lots of products or cost centers
๏ Thousands of shared AWS
resources
๏ Distributed teams using AWS
Tools for splitting up resources
• Tags are highly flexible, but 100% coverage is difficult due to compliance
• Linked accounts offer clean chargeback but limit reporting options
Pro tips: Allocating Costs
• Get consensus on the taxonomy (but let Finance drive)
• Define 2-3 mandatory tags like “project” or “environment”
• Consider a “tag or terminate” rule to enforce compliance
Visibility
Allocation Efficiency
Savings
Unit Cost
III. Efficiency
168hours in a
week
168hours in a
week
nights &
weekend
s
108
Don’t run the cloud like a data center:
65% of the hours in a month are
nights and weekends
Three easy wins for Amazon EC2 efficiency…
Turn off underutilized instances
Low CPU, low bandwidth, low disk I/O, >1 day old | This example: Save $1,682 per week
Schedule Dev/Test downtime
Find legacy instances that could be upgraded
1. Newer instance families are faster/cheaper but have smaller SSDs
2. Look for instances that have attached Amazon Elastic Block Store
(EBS) and low ephemeral disk access
3. Move M1 to M3 to save $0.03-$0.10 per hour
Source: http://aws.amazon.com/ec2/pricing/
Get alerts when thresholds are crossed
Tips for encouraging efficient behavior
1. Automate weekly waste reporting for each team
2. Gamify cleanup by creating a visible leaderboard
1. Do a monthly, company-wide waste review
Visibility
Allocation Efficiency
Savings
Unit Cost
IV. Savings
Spot vs Reserved Instances?
Reservations require no engineering,
enabling finance to autonomously
reduce costs
Buy Reserved Instances based on current hourly data
Don’t wait to buy reservations until you’ve completed the perfect analysis— you’ll waste
more money than you save
Aligning RIs to infrastructure is more important
than ever because RIs are all sunk cost
Tips for reservation efficiency
1. Appoint a person to own reservation purchases– often
a tech-minded finance person
2. Start with an immediate small and uncontroversial buy
1. Buy iteratively on a schedule that you hold sacred
Visibility
Allocation Efficiency
Savings
Unit Cost
V. Unit Cost
Why does unit cost matter?
0
45
90
135
180
225
De
v/T
est
PO
C
App #
1
App #
3
App #
2
Exec team starts
really caring
Hic
cup
An increasing bill isn’t necessarily a bad
thing
0
45
90
135
180
225
The bill still
goes up!
Sta
ge III
Efficiency
Sta
ge IV
RIs
Unit cost is
cost per X
cost per subscriber
cost per pageview
cost per customer
cost per API call
Focus on reducing unit cost, even at total cost grows
0
30
60
90
120
150
Unit cost Total cost
Unit cost =
total cost / business metric
$1000 / 1000 customers =
$1 unit cost
Visibility
Allocation Efficiency
Savings
Unit Cost
What does it look like in the real world?
Case study: Enterprise with 100s of apps
• Split the detailed billing reports into 750 different views broken down by
BUs/applications/environments/etc.
• Daily spending updates
800 users get daily emails with just their spending
• Oversight for reporting and control
Execs/finance see the total spending in a simple weekly digest
"Our goal is to put control of AWS resources in each product team’s hands. We want
to get out of the way but at the same time we still need oversight to stop
overspending.”
Case study: Scaled web business pushing unit cost
• Product owners track unit cost daily tying spending to revenue
• Operations examines infrastructure changes in terms of unit cost impact
• Finance reports monthly & quarterly on margin impacts based on unit cost
• VPs set goals on unit cost and worry less about setting arbitrary total cost
goals
Shortcut: Track your AWS bill as a percentage of revenue
realestate.com.au: Increasing efficient use among
ops/engineers
• Lots of developers using dev/test
instances and forgetting to turn them
off
• Used Cloudability API data to
normalize dev/test environment
“health”
• Developed an algorithm to determine
health/sickness of any dev/test
environment
avg hourly node cost ($)
x
avg node uptime (%)
x
sq rt inverse of CPU util (%)
x
avg node running life (hrs)
x
avg daily unique nodes^1.3
Midge’s law
Adobe: Optimizing thousands of reserved instances
• One team purchases Reserved
Instances across Adobe
• Established a consistent
monthly purchase to account
for change
25th of the month:
Central team drives decisions with
minimal input from teams
26th of the month:
Modifications made each month
ahead of purchase
28th of the month:
Purchase based on the current
month’s utilization data
Getting started on your culture
Things to do right after this Summit
I. Visibility: Set up a daily spending report for stakeholders
II. Allocation: Meet with your finance team to determine the taxonomy for tags & linked
accounts
III. Efficiency: Look for underutilized instances (low CPU+BW+disk) and M3 candidates
IV. Savings: Make an immediate small and uncontroversial Reserved Instance buy
V. Unit cost: Determine a top-line business metric, divide last months’ costs by it
Thank you
J.R. Storment, Chief Customer Officer @ Cloudability
@cloudability | Booth #403 | jr@cloudability.com
San Francisco